Asian Stocks Are Little Changed as Hong Kong Gauge Slumps

Asian stocks were little changed,
with the regional benchmark gauge swinging between gains and
losses, as Hong Kong shares sank.

China Mobile Ltd. dropped 2.4 percent in Hong Kong as
telecommunication shares fell most among the regional index’s
industry groups. Bank of China Ltd. sank after the nation’s
seven-day repurchase rate, a gauge of cash availability, rose to
a seven-week high. Olympus Corp. surged 4.9 percent after
Goldman Sachs Group Inc. reiterated its buy rating on the
Japanese optics maker.

The MSCI Asia Pacific Index (MXAP) rose less than 0.1 percent to
144.75 as of 7:43 p.m. in Hong Kong after climbing as much as
0.6 percent. The city’s Hang Seng Index slumped 1.7 percent, the
most since March 20, reversing a 0.9 percent advance. Shares
rose earlier as a preliminary index of China factory activity
from HSBC Holdings Plc and Markit Economics beat estimates.

“Although PMI was better than expected today, there’s not
enough confidence in the market to push any gains further,”
said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu.
“There’s the fear of a June liquidity crunch. It happens every
June and last year’s squeeze was quite bad.”

The cost of one-year swaps, the fixed payment needed to
receive the floating seven-day repurchase rate, climbed as much
as two basis points to 3.48 percent in Shanghai, data compiled
by Bloomberg show. Bank of China fell 2.6 percent to HK$3.38.

HSBC/Markit’s preliminary Chinese manufacturing survey
reached a seven-month high of 50.8 for June, exceeding the 49.7
median estimate of analysts surveyed by Bloomberg News and a
final reading of 49.4 in May. Figures above 50 indicate
expansion.

‘Much Better’

“The Chinese data is looking much better, definitely
better than my expectation,” Pauline Dan, who helps oversee
$153 billion as the Hong Kong-based head of greater China
equities at Pictet Asset Management Ltd., said by phone. “The
government is trying to maintain economic momentum, fine-tuning
monetary policy to achieve the 7.5 percent growth target this
year. Relative to the region, definitely Chinese stocks are
looking attractive. We have been nibbling.”

The nation’s central bank won’t loosen its “appropriately
tight” monetary policy in the second-half and will deploy
targeted reserve requirement ratio adjustments, Yi Xianrong, a
researcher at the Chinese Academy of Social Sciences, wrote in
an article in Shanghai Securities News.

China’s economic slowdown deepened this quarter, as capital
spending showed weakness and fewer companies applied for credit,
according to the China Beige Book, a report published quarterly
by New York-based China Beige Book International.

Among other shares that rose, Hon Hai Precision Industry
Co. gained 3.5 percent to NT$97.60 in Taipei. The Economic Daily
News reported that Hon Hai is hiring workers for the production
of Apple Inc.’s iPhone 6.

The Asia-Pacific gauge traded at 13.3 times estimated
earnings at the last close, compared with 16.6 for the S&P 500
and 15.5 for the Stoxx Europe 600 Index, according to data
compiled by Bloomberg.